Series 7 cheat sheet

Telemarketing calls may be placed only between 8:00 a.m. and 9:00 p.m. in the called party's local time zone.

Outbound call lists must be compared against the FTC Do Not Call registry at least once every 31 days; the firm's internal do-not-call list must be honored for 5 years.

During or immediately after a cold call, the caller must state their name, the firm's name, a telephone number or address, and that the purpose of the call is solicitation.

FINRA Rule 3220: gifts or entertainment to another firm's employees are capped at $100 per person per year unless the employing firm gives prior written consent.

FINRA Rule 2210: retail communications must be approved by a registered principal before first use; correspondence (25 or fewer retail investors within 30 days) requires supervision but not pre-use approval.

Transaction-based compensation paid to an unregistered person for soliciting investors violates Exchange Act Section 15(a) registration requirements (finder's fee prohibition).

A suspicious activity report is filed with FinCEN within 30 calendar days of initial detection for activity involving at least $5,000, and the customer may never be told it was filed.

Regulation Best Interest imposes four obligations on recommendations to retail customers: disclosure, care, conflict of interest, and compliance.

New member firms must file retail communications with FINRA within 10 business days of first use, and similar filing rules apply to investment company and public offering materials.

CIP requires collecting name, date of birth (individuals), address, and an identification number, then verifying identity within a reasonable time before or after opening.

All customers must be screened against the OFAC blocked-persons list; blocked property must be reported to OFAC within 10 business days.

FINRA Rule 4512 requires reasonable efforts to obtain a trusted contact person for every natural-person account, with records retained 6 years.

FINRA Rule 2165 permits a 15-business-day hold on suspicious disbursements (extendable 10 business days) plus required notification to the trusted contact or other parties.

Options accounts require delivery of the ODD and a signed options agreement returned within 15 days; an unreturned agreement restricts the account to closing transactions.

The margin agreement contains the hypothecation clause; the loan consent clause is optional and, if signed, allows the firm to lend customer margin securities.

Ongoing discretion requires written power of attorney and principal approval; a verbal instruction may cover one specific trade but must be documented.

Suitability and best-interest profiling considers financial situation and needs, tax status, investment objectives, experience, time horizon, liquidity needs, and risk tolerance.

Account titling controls what happens at death: JTWROS passes to the survivor by contract, while TIC interests pass through the decedent's estate.

ACATS: the receiving member submits the transfer instruction form within 1 business day of the customer's signed request, the delivering member validates within 3 business days, and delivery typically follows within 3 business days after validation.

SEC Rule 17a-4: most books and records are kept 6 years with the first 2 readily accessible; correspondence and communications are kept 3 years; order tickets 3 years.

Records of customer complaints, including the complaint text and the firm's response, must be preserved for 4 years.

A confirmation for a mutual fund purchase must be accompanied or preceded by the statutory prospectus.

Retail communications showing performance must present 1-, 5-, and 10-year periods (or since inception if shorter) using standardized total return, and may not be misleading.

A testimonial from a client must disclose that it may not be representative of other clients' experience and disclose any compensation paid for it.

FINRA Rule 2241: research analysts may not be supervised or controlled by investment banking personnel and may not be compensated for specific investment banking transactions; quiet periods apply around offerings.

Excessive trading is evaluated quantitatively through turnover rate and cost-to-equity ratio measured against the customer's stated objectives.

FINRA Rule 2231: account statements must be delivered at least quarterly, and monthly when the account has activity during the period.

Regular-way settlement for stocks and corporate bonds is trade date plus one business day (T+1), effective May 28, 2024.

A buy limit executes only at or below the limit price; a sell limit only at or above it; a limit order may never be filled.

A stop order becomes a market order once the stop price trades, so the execution price is not guaranteed; a stop-limit order becomes a limit order at the trigger.

Rule 10b-10 confirmations must show the security, price, date and time of execution, capacity (agent or principal), commission, and applicable yield or payment-for-order-flow disclosure.

Regulation T initial margin is 50% of the purchase price for long stock; FINRA maintenance margin is 25% of long market value; minimum margin account equity is $2,000.

A pattern day trader (4 or more day trades in 5 business days in a margin account) must maintain $25,000 minimum equity, and day-trading buying power is 4 times maintenance excess.

Failure to pay for a purchase by settlement (free riding) results in a 90-day cash-up-front restriction under Regulation T.

FINRA Rule 5310 requires reasonable diligence to obtain the most favorable terms reasonably available for customer orders under prevailing market conditions.

Records of orders received and executed, including terms, time, account, and the person accepting the order, must be retained 3 years.